DAVIS, Judge.
This case involves a dispute regarding the entitlement of Plaintiff Bank of America, N.A. ("BOA") to enforce novations to three promissory notes executed by Defendant Christopher Harvey Rice ("Rice").
This matter is before us for the second time. The underlying facts giving rise to this action are set out more fully in Bank of Am., N.A. v. Rice, 230 N.C. App. 450, 750 S.E.2d 205 (2013) ("BOA I"), and are quoted in pertinent part as follows:
Id. at 452-55, 750 S.E.2d at 207-09 (emphasis omitted).
In BOA I, the sole issue before this Court was whether Rice was entitled to compel arbitration of BOA's claims against him because of the existence of arbitration clauses in the 2004, 2005, and 2006 notes despite the fact that no such clauses were contained in the 2010 novations. Rice argued that the 2010 novations were invalid and did not supersede the 2004, 2005, and 2006 notes because there was no mutuality of parties as between the 2010 novations and the original notes. We determined that the trial court had not erred in denying Rice's motion to compel arbitration. Id. at 458-59, 750 S.E.2d at 211.
With regard to the 2004 note and its 2010 novation, we held as follows:
Id. at 457-58, 750 S.E.2d at 210 (internal citation omitted).
We also affirmed the portion of the trial court's order rejecting Rice's attempt to compel arbitration as to BOA's claims arising under the novations to the 2005 and 2006 notes but on a different ground.
Id. at 458-59, 750 S.E.2d at 210-11 (internal citations omitted).
We then summarized our holding as follows:
Id. at 459, 750 S.E.2d at 211.
Following our decision in BOA I, the case was remanded to the trial court for further proceedings. Rice filed an answer to BOA's complaint on 10 February 2014, setting forth various affirmative defenses and asserting counterclaims for (1) breach of contract (in which Rice alleged he was entitled to compensation pursuant to certain incentive plans
On 17 April 2014, BOA filed (1) a motion to dismiss Rice's counterclaims pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure; and (2) a motion for judgment on the pleadings based on Rule 12(c) or, in the alternative, a motion for summary judgment pursuant to Rule 56 to enforce the 2010 Novations based on Rice's failure to make the payments to BOA required thereunder.
On 23 June 2014, a hearing on BOA's motions was held before the Honorable H. William Constangy in Mecklenburg County Superior Court. Following the hearing, Judge Constangy took the motions under advisement.
In the meantime, the parties continued to engage in discovery. During discovery, BOA produced documentation disclosing new information about events that had occurred between the signing of the original 2005 and 2006 notes and the execution of the 2010 Novations. These documents essentially showed the following: (1) In October 2009, BAI merged into Merrill Lynch, Pierce, Fenner and Smith, Inc. ("MLPF & S"), a subsidiary of Merrill Lynch; (2) MLPF & S therefore became the legal holder of the 2005 and 2006 notes originally entered into by Rice and BAI; and (3) BOA subsequently acquired Merrill Lynch and, as part of the acquisition, BOA acquired approximately 205 promissory notes held by MLPF & S, including the 2005 and 2006 notes.
On 12 September 2014, BOA filed a motion for summary judgment in which it sought to enforce Notes 2 and 3. In support of its motion, BOA submitted (1) the affidavit of Allen Bednarz, BOA's Director of Global Wealth & Investment Management Compensation Administration; (2) copies of the 2004, 2005, and 2006 notes; (3) copies of the 2010 Novations; (4) various records pertaining to Rice's compensation; (5) the affidavit of John Romano, BAI's Chief Financial Officer from 2006 through October 2009; (6) the affidavit of Donald Brock, the Controller of U.S. Trust (a subsidiary of BOA); (7) excerpts from Rice's deposition; and (8) Rice's interrogatory responses. On that same date, Rice filed a cross-motion for summary judgment supported by his own affidavit. In his cross-motion, he contended that in light of our decision in BOA I the law of the case doctrine precluded the trial court from finding that Notes 2 and 3 were legally effective novations of the 2005 and 2006 notes.
On 7 October 2014, a hearing on BOA's motion for summary judgment and Rice's cross-motion was held before the Honorable W. Robert Bell. On 20 November 2014, Judge Bell issued an order ("Judge Bell's Order") granting Rice's cross-motion as to Notes 2 and 3 and denying BOA's motion. On that same date, the Honorable Richard D. Boner entered an order ("Judge Boner's Order")
On 10 December 2014, BOA filed a notice of appeal from Judge Bell's Order. On 29 December 2014, Rice gave notice of appeal as to Judge Boner's Order.
BOA argues that Judge Bell erred in denying its motion for summary judgment and granting Rice's cross-motion on its claims for breach of contract as to Notes 2 and 3. We agree.
Malone v. Barnette, ___ N.C.App. ___, 772 S.E.2d 256, 259 (2015) (internal citations and quotation marks omitted).
BOA contends that the trial court inappropriately utilized the law of the case doctrine in reaching its conclusion that BOA was not entitled to enforce Notes 2 and 3 as novations to the 2005 and 2006 notes. Rice, conversely, argues that the doctrine was correctly applied because BOA I definitively established that Notes 2 and 3 were not legally effective novations to the 2005 and 2006 notes.
The law of the case doctrine provides that
Hayes v. City of Wilmington, 243 N.C. 525, 536, 91 S.E.2d 673, 681-82 (1956).
"The general rule is that an inferior court must follow the mandate of an appellate court in a case without variation or departure. However, the general rule only applies to issues actually decided by the appellate court. The doctrine of law of the case does not apply to dicta, but only to points actually presented and necessary to the determination of the case." Condellone v. Condellone, 137 N.C. App. 547, 551, 528 S.E.2d 639, 642 (internal citations and quotation marks omitted), disc. review denied, 352 N.C. 672, 545 S.E.2d 420 (2000). Notably, for purposes of the present appeal, "the law of the case doctrine does not apply when the evidence presented at a subsequent proceeding is different from that presented on a former appeal." State v. Lewis, 365 N.C. 488, 505, 724 S.E.2d 492, 503 (2012).
Hayes, 243 N.C. at 537, 91 S.E.2d at 682 (internal citations omitted).
In urging us to uphold the trial court's application of the law of the case doctrine, Rice attempts to rely on language in BOA I stating that Notes 2 and 3 were not valid novations because (1) BAI — rather than BOA — had executed the 2005 and 2006 notes; and (2) BAI did not sign or ratify Notes 2 and 3. However, Rice ignores our express recognition in BOA I of the fact that based on the record before us at that time there was no "indication that the 2005 and 2006 Notes were ever transferred by BAI to [BOA]." BOA I, 230 N.C.App. at 459 n. 7, 750 S.E.2d at 211 n. 7. That is no longer the case.
Our decision in BOA I was issued in the context of a bare factual record due to the fact that the appeal in BOA I was taken before the parties had begun discovery. Following our decision, based on new facts obtained during discovery conducted between the parties, BOA submitted unrebutted affidavit testimony in support of its motion for summary judgment establishing that because of BOA's acquisition of the 2005 and 2006 notes, BAI was no longer the holder of these notes at the time the 2010 Novations were executed and, for this reason, was not required to ratify them. Thus, the present record on appeal contains facts that had not yet been discovered at the time of BOA I, and — as a result — the observations we made in BOA I forming the basis for Rice's present argument no longer conform to the factual record before us. See State v. Paul, 231 N.C. App. 448, 450, 752 S.E.2d 252, 254 (2013) ("The law of the case principle does not apply when the evidence presented at a subsequent proceeding is different from that presented
It is also worthy of emphasis that our decision in BOA I explicitly recognized that the only issue actually before this Court was whether Rice was entitled to compel arbitration of BOA's claims against him. See BOA I, 230 N.C.App. at 459, 750 S.E.2d at 211 (affirming trial court's denial of motion to compel arbitration and "express[ing] no opinion" on various additional issues "[b]ecause of the narrow issue presented in this appeal"). None of the issues in the present appeal require us to reexamine our prior ruling on the discrete issue decided in BOA I relating to whether BOA's claims must be arbitrated. For all of these reasons, the law of the case doctrine does not control our decision in the present appeal as to whether BOA was entitled to summary judgment on its claims to enforce Notes 2 and 3 as novations to the 2005 and 2006 notes.
Nor has Rice identified any legal impediment to the acquisition of the 2005 and 2006 notes by BOA. "The general rule is that contracts may be assigned. The principle is firmly established in this jurisdiction that, unless expressly prohibited by statute or in contravention of some principle of public policy, all ordinary business contracts are assignable, and that a contract for money to become due in the future may be assigned." Hurst v. West, 49 N.C. App. 598, 604, 272 S.E.2d 378, 382 (1980) (citation and quotation marks omitted). Furthermore, an "assignment operates as a binding transfer of the title to the debt as between the assignor and the assignee regardless of whether notice of the transfer is given to the debtor." Lipe v. Guilford Nat. Bank, 236 N.C. 328, 331, 72 S.E.2d 759, 761 (1952); see Credigy Receivables, Inc. v. Whittington, 202 N.C. App. 646, 652, 689 S.E.2d 889, 893 ("It has long been the law in North Carolina that the assignee stands absolutely in the place of his assignor, and it is as if the contract had been originally made with the assignee, upon precisely the same terms as with the original parties." (citation, quotation marks, and ellipses omitted)), disc. review denied, 364 N.C. 324, 700 S.E.2d 748 (2010).
Based on the factual record currently before us, it is clear that BOA, not BAI, was the holder of the 2005 and 2006 notes at the time of the 2010 Novations. As such, BAI was no longer an interested party with regard to the notes at that time and was not legally entitled to receive notice of the 2010 Novations or required to ratify them in order for them to constitute valid novations.
"The elements of a claim for breach of contract are (1) existence of a valid contract and (2) breach of the terms of that contract." Branch v. High Rock Realty, Inc., 151 N.C. App. 244, 250, 565 S.E.2d 248, 252 (2002) (citation and quotation marks omitted), disc. review denied, 356 N.C. 667, 576 S.E.2d 330 (2003). In support of its motion for summary judgment, BOA not only submitted competent evidence explaining its acquisition of the 2005 and 2006 notes prior to the execution of the 2010 Novations but also provided the following: (1) the 2005 and 2006 notes (signed by Rice); (2) Notes 2 and 3 (signed by Rice); (3) the deposition testimony of Rice in which he admitted that he had not paid the outstanding balances owed on Notes 2 and 3; and (4) the affidavit of Brock, who testified as to the precise amounts still owed on Notes 2 and 3 as of 2 October 2014. Rice has failed to make any valid argument refuting BOA's evidence that Notes 2 and 3 are legally enforceable novations to the 2005 and 2006 notes. Therefore, having established both that it was the real party in interest entitled to enforce Notes 2 and 3 and that Rice breached the terms thereof, BOA demonstrated that no genuine issue of material fact existed and that it was entitled to summary judgment on its claims as to Notes 2 and 3.
Accordingly, we reverse the order of Judge Bell denying BOA's motion for summary judgment as to its claims based on Notes 2 and 3 and granting Rice's cross-motion. We remand to the trial court for the entry of summary judgment in favor of BOA as to these claims.
We next address Rice's appeal of Judge Boner's Order granting both BOA's Rule 12(c) motion for judgment on the pleadings as to BOA's breach of contract claim regarding Note 1 and BOA's Rule 12(b)(6) motion to dismiss Rice's counterclaims. Rice's sole
It is well settled that "[b]oth a motion for judgment on the pleadings and a motion to dismiss for failure to state a claim upon which relief can be granted should be granted when a complaint fails to allege facts sufficient to state a cause of action or pleads facts which deny the right to any relief." Robertson v. Boyd, 88 N.C. App. 437, 440, 363 S.E.2d 672, 675 (1988).
Horne v. Town of Blowing Rock, 223 N.C. App. 26, 30, 732 S.E.2d 614, 617 (2012) (internal citations, quotation marks, and brackets omitted).
"If, however, documents are attached to and incorporated within a complaint, they become part of the complaint. They may, therefore, be considered in connection with a Rule 12(b)(6) or 12(c) motion without converting it into a motion for summary judgment." Weaver v. Saint Joseph of the Pines, Inc., 187 N.C. App. 198, 204, 652 S.E.2d 701, 707 (2007). This is due to the fact that
Coley v. N.C. Nat. Bank, 41 N.C. App. 121, 126, 254 S.E.2d 217, 220 (1979).
In Coley, the plaintiffs asserted that the trial court erred by considering materials outside the pleadings in ruling on the defendants' Rule 12(b)(6) motion to dismiss the plaintiffs' claim for fraudulent inducement without giving the plaintiffs a reasonable time in which to present additional materials in opposing the motion. Id. The plaintiffs argued that because the court considered materials outside of the pleadings — namely, the contract at the heart of the plaintiffs' fraudulent inducement claim — the motion should have been converted into a motion for summary judgment under Rule 56. Id. In rejecting the plaintiffs' argument, we noted that the plaintiffs had specifically referred to the contract at issue in their complaint and that, for this reason, the trial court was not required to convert the matter into a summary judgment motion.
Id.
We elaborated on this principle in Oberlin Capital, L.P. v. Slavin, 147 N.C. App. 52, 554 S.E.2d 840 (2001).
Id. at 60, 554 S.E.2d at 847 (internal citations omitted).
Here, it is clear from the face of Judge Boner's Order that the trial court did not
Rice contends that it was improper for the trial court to consider the excerpts attached to BOA's Rule 12 motions from the two compensation plans pursuant to which Rice sought payment in his counterclaims — the "U.S. Trust, Bank of America Private Wealth Management 2010 U.S. Trust Private Client Advisor/Private Client Manager Incentive Plan" ("the 2010 PCA Incentive Plan") and the U.S. Trust "2011 Compensation Plan Overview" (collectively "the Incentive Plans").
Rice claims the trial court similarly erred in considering Exhibits A and B to the "Judge's Notebook" submitted by BOA. The Judge's Notebook consisted of a memorandum of law and copies of various cases along with two attached exhibits. Exhibit A was an additional excerpt from the 2010 PCA Incentive Plan. Exhibit B was an excerpt from Rice's "2010 Scorecard," which indicated that Rice had been employed by BOA as a Private Client Advisor II in 2010 and had received a negative performance review.
Rice does not contest the authenticity of either the excerpts from the Incentive Plans or the 2010 Scorecard. Instead, his only argument, as noted above, is that these documents were extraneous to the pleadings and, accordingly, should not have been considered in connection with BOA's Rule 12 motions. We address these documents in turn.
The fatal flaw with Rice's argument regarding the Incentive Plans is that — as Judge Boner's Order noted — Rice specifically referenced both plans in his counterclaims, alleging the following:
We rejected an analogous argument in Robertson. In that case, the plaintiffs purchased a home from the defendants. In conjunction with the sale, the defendants provided the plaintiffs with a termite inspection report stating that the residence was free of any termite damage. After closing, however, the plaintiffs discovered that the house had, in fact, suffered termite damage. The plaintiffs therefore brought suit against the defendants for fraudulent misrepresentation and concealment and referenced the termite report in their complaint. Robertson, 88 N.C.App. at 439, 363 S.E.2d at 674.
The defendants filed a motion to dismiss as well as a motion for judgment on the pleadings. The trial court granted the defendants' motion to dismiss, and on appeal the plaintiffs argued that the trial court had impermissibly considered the termite report without converting the defendants' motion into a motion for summary judgment. Id. at 440-41, 363 S.E.2d at 674-75. In holding that the
Id. at 440-41, 363 S.E.2d at 675.
Here, similarly, the Incentive Plans considered by the trial court were expressly referenced in Rice's own counterclaims. Consequently, the trial court's review of excerpts from these documents did not require the conversion of BOA's Rule 12 motions into motions for summary judgment.
Unlike the Incentive Plans, Rice's 2010 Scorecard was not referenced in the parties' pleadings. Therefore, the excerpt from the 2010 Scorecard should not have been considered by the trial court in ruling on BOA's Rule 12 motions.
However, we are satisfied that the trial court's consideration of this document was merely harmless error. Rice has failed to demonstrate in his appellate brief how the 2010 Scorecard related to the merits of his counterclaims (or, for that matter, to the merits of BOA's breach of contract claim as to Note 1), and, therefore, he has not shown that he was actually prejudiced by the trial court's error.
Both of the Incentive Plans expressly provided that
BOA's primary argument as to why Rice was not eligible to receive the compensation sought in his counterclaims was that his resignation from BOA resulted in a forfeiture of his right to receive such compensation under the plain language of the plans.
Moreover, the trial court's entry of judgment on the pleadings in BOA's favor in connection with Note 1 was based solely on the undisputed fact that Rice was in default and had nothing to do with the contents of the 2010 Scorecard. Therefore, once again, Rice has failed to demonstrate any prejudice resulting from the court's consideration of that document. See Cabaniss v. Deutsche Bank Secs., Inc., 170 N.C. App. 180, 184, 611 S.E.2d 878, 881 ("[P]laintiffs argue that the trial court wrongly considered documents outside the scope of the second amended complaint which were attached to the motion to dismiss. However, given plaintiffs' failure to comply with the demand requirements as discussed above, the court's consideration of the letter in making its ruling, while improper, was not prejudicial." (internal citation omitted)), cert. denied, 360 N.C. 61, 621 S.E.2d 176 (2005).
The final issue in this appeal concerns BOA's contention that it is entitled to an award of attorneys' fees in connection with its enforcement of Notes 2 and 3. "The general rule in this state is a successful litigant may not recover attorneys' fees, whether as costs or as an item of damages, unless such a recovery is expressly authorized by statute." Calhoun v. WHA Med.
N.C. Gen.Stat. § 6-21.2(2) (2013).
Notes 2 and 3 (like Note 1) each contain the following provision:
Judge Boner's Order granting BOA judgment on the pleadings as to Note 1 stated the following: "The award of [BOA's] costs, including its reasonable attorneys' fees, associated with the issues decided by this Order will be determined in a subsequent motion proceeding." In light of our determination that BOA was entitled to summary judgment in connection with Notes 2 and 3, we direct the trial court on remand to make a similar determination accompanied by appropriate findings as to BOA's entitlement to attorneys' fees in connection with its enforcement of Notes 2 and 3.
For the reasons stated above, we (1) affirm Judge Boner's Order; (2) reverse Judge Bell's Order; and (3) remand for the entry of summary judgment in favor of BOA on its claims as to Notes 2 and 3 and for further proceedings in connection with BOA's motion for attorneys' fees.
AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.
Chief Judge McGEE and Judge ELMORE concur.
